Palestinian President Mahmoud Abbas proposed Tuesday the creation of a multilateral international mechanism to broker an elusive Palestinian-Israeli peace.

The mechanism would be borne out of an international conference to be held by mid-2018, Abbas said.

"We are ready to begin negotiations immediately in order to achieve the freedom and independence of our people," he said in remarks before the UN Security Council. "We are ready to undertake the longest journey."

Following U.S. President Donald Trump's controversial decision to recognize the contested city of Jerusalem as Israel's capital, Palestinians have rejected Washington's role as a peace broker between the parties, and the plan Abbas proposed is intended as a replacement.

U.S. ambassador to the UN Nikki Haley shrugged off the proposal, saying the alternative "will get the Palestinian people exactly nowhere.

"Our negotiators are sitting right here behind me, ready to talk. But we will not chase after you. The choice, Mr. president, is yours," she said, flanked by Jared Kushner, Trump's point person on the Mideast peace process.

Trump's decision is at odds with long-held understandings about Jerusalem's status. The city was considered a final-status issue to be negotiated by Israel and Palestine, and the Palestinians are seeking its east as their capital.

Trump said the move has taken Jerusalem "off the table.

"They never got past Jerusalem. We took it off the table. We don’t have to talk about it anymore," Trump remarked.

But in addition to evoking the ire of the Palestinians, the decision prompted widespread condemnation from the international community, including Washington's close allies who have unanimously resisted Tel Aviv's calls to follow suit.

Urging nations to recognize Palestine as a full member state, Abbas further charged Israel is "acting as a state above the law", citing its illegal settlements and continued military presence in the West Bank.

"It has transformed the occupation from a temporary situation as per international law into a situation of permanent settlement, colonization," he said in remarks translated from Arabic. "It colonized all the areas that it wanted, including Jerusalem, that your august council considers an occupied territory. How can this happen?"

Israel has controlled the whole of Jerusalem since 1967.

Nickolay Mladenov, the UN's special coordinator for Middle East peace, warned during the Security Council session "the enemies of peace are growing more confident by the day.

"They believe the political odds are tilting in their favor," he said.

"Hindering peace are also those who push facts on the ground, who promote unilateral moves blocking the pathway back to the negotiating table. None of this will bring us closer to resolving the conflict. None of it will respond to the inalienable right of the Palestinian people to statehood or the Israeli longing for security," Mladenov added.